17 June 2011
Mr MORRIS (Mornington) — I seem to recall the member for Richmond saying some 15 or 20 minutes ago he was going to conclude so that others had an opportunity to make a contribution but his time seems to have expired. We have just been treated to a vintage contribution from the member for Richmond. It was a highly entertaining contribution, as his contributions often are, but it was significantly light on accuracy, and some passages were rather lacking in veracity.
The former government’s application of the growth areas infrastructure charge unfairly penalised families, it unfairly penalised small land‑holders and it particularly penalised those who had no desire to develop their land for profit.
This bill delivers on the government’s commitment to make the growth areas infrastructure contribution (GAIC) fairer and make sure that it is paid only by those who choose to develop their land. Picking up one of the claims in the speech of the member for Richmond, I make the point that the government has committed to meet all its election commitments, but it will do so according to a timetable of its own choosing and not a timetable that the opposition may seek to set for it.
It is worth remembering the history of this debate. In December 2008 the former government announced that land which was within the urban growth boundary would be subject to a once‑only contribution to provide state infrastructure. As the previous speaker said, the bill to implement that was defeated in the Legislative Council in February of last year. The bill was referred to the infamous Dispute Resolution Committee in March last year. It was not the only bill to go before that committee, but it was the probably the only case where a reasonable negotiation occurred. The Transport Legislation Amendment (Ports Integration) Bill 2010, the successor to which we debated yesterday, was referred to that committee and was forced through.
The final iteration of the GAIC bill last year included amendments which the government and the opposition agreed on. Members of the then opposition did not get everything we wanted, but we improved it significantly, and the 30 per cent liability that remained was an initiative of the then opposition and had absolutely nothing to do with the then government. The changes that were made allowed the 30‑70 split, with the 70 per cent to be deferred and paid in stages. The outstanding balance of the liability was indexed at consumer price index rates up until the point when a precinct structure plan was put into place. Beyond that point interest was charged at the rate of Treasury Corporation of Victoria bonds.
Under that bill properties of between 0.41 and 5 hectares are exempt from the GAIC unless subdivided or developed. Properties of 10 hectares or less are also exempt so long as there is a habitable dwelling or until subdivision or development occurs. Fifty per cent of GAIC funds is to be spent on delivering public transport and 50 per cent is to go into other areas.
There were considerable improvements as a result of that negotiation, but nevertheless we are left with a scheme which is lacking in fairness and a scheme that continues to penalise those who have no desire to develop their land for profit. The current government went into the election with a commitment to make the GAIC fairer, and this bill indeed delivers on that promise. Under the proposed legislation the triggers for the GAIC remain, but under clause 10 landowners will have an automatic entitlement to defer payment of up to 100 per cent of the GAIC until the land is to be developed for urban purposes — in other words, when a developer has completed all the necessary works to allow subdivided lots to be sold.
Enabling the GAIC to be deferred until land is ready to be developed ensures that it is more properly a tax on development. It ceases to be a tax on the sale of land, which was the nature of the tax that was originally proposed by the former government. Profit derived from development should be taxed at the point of development, not at some previous point in the sale of the land. Under this bill an application can be made to the State Revenue Office for a certificate of deferral within three months of a property transfer being settled.
That will be automatically provided for if the purchaser seeks it. Once the certificate is obtained the purchaser takes it to the registrar of titles to transfer the title. The registrar cannot accept the transfer unless the appropriate certificate is provided by the SRO. What is proposed is fairly straightforward. It will result in a significantly fairer tax, a tax targeted at the point of development and not simply a sale‑of‑land tax, as was proposed.
The work‑in‑kind (WIK) agreements are a significant improvement on the current process. They will allow a GAIC liability to be discharged by the provision of land or by the construction of state infrastructure in lieu of a cash payment. Whether a WIK agreement can be entered into or not is at the sole discretion of the state government, as it should be. After all, we are talking about the provision of state infrastructure, and we do not want a situation where private developers provide infrastructure that they choose to provide, which may not necessarily be a priority of the state government, yet the state government would be forced to enter into that agreement.
That aspect of it is essential. Any capital works can be the subject of a WIK agreement, provided they are relevant to section 201V of the Planning and Environment Act 1987, and of course those works are funded from the two funds — the Growth Areas Public Transport Fund and the Building New Communities Fund.
The member for Richmond sought to create a link between the provision of ordinary infrastructure that will improve the marketing of residential developments and developments generally, and the provision of state infrastructure. The two things are entirely separate. I suggest that for the member for Richmond to think that the market can simply provide the sorts of things that are provided for in the Planning and Environment Act in terms of those two funds and then claim to be providing infrastructure to improve a development is simply wrong, and it displays a fundamental misunderstanding of the way markets work.
Because the WIK agreements relate to the discharge of a state tax, a number of provisions relate to protecting the government’s interests and protecting the interests of the people of Victoria.
For instance, where a WIK agreement is in place and an owner seeks to dispose of the land, the Minister for Planning is able to apply a restriction on the sale of that land until he is satisfied that the agreement will be met by the new owner. These provisions ensure that anyone who enters into an agreement will be required to meet their obligations.
I make the observation that a GAIC liability is only taken to have been satisfied when the Growth Areas Authority notifies the State Revenue Office that works have been completed to the satisfaction of the relevant state government department or agency. To suggest that entering a WIK agreement is a way of avoiding this tax is a slur on the officers of the State Revenue Office and a slur on the officers of the Growth Areas Authority. I think the member for Richmond should be ashamed of himself.
The bill before us will result in significantly improved outcomes for small land‑holders caught up in the former government’s failed attempt to levy an extra tax on the sale of land in growth areas. The bill ensures that the infrastructure charge will remain just that — a charge at the point of development — and introduces work‑in‑kind agreements to provide greater flexibility and encourage the delivery of infrastructure to the growth areas in a timely manner. I commend the bill to the house.
Legislative Assembly 17 June 2011
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